Using m new SIO2SD

I just received my new SIO2SD and am a bit confused in the operation.  I just cant seem to copy any of the ATR files from the SD card back onto floppies.  I have a Happy 1050 hooked up & set as D2, but with the SIO2SD hooked up all I get from the 1050 is a 138 error, cant even get the Atari to see the drive while the SIO2SD is hooked up.    I have the Atari hardware to run these programs, why can't I get it to work?  Is there a different way of hooking it up?  Or is it incompatible with having an actual 1050 in the same daisy-chain?  This is driving me nutz, cuz it "should" work.
Any help available?